Qatar Al Shaheen tender awarded at lower premiums, flags Saudi OSP cut
Quantum Commodity Intelligence - QatarEnergy has awarded its monthly Al Shaheen tender for December at lower levels from the previous month, reflecting the broader weakness in Asian oil markets this month, said traders.
The state-owned firm was heard to have awarded three cargoes of the medium sour grade at premiums of $4-4.40/b to the underlying Dubai swap, with the higher premium paid for the early December cargoes and lower numbers for the two stems loading at the back end of the month.
This compares to last month when the grade went at premiums of over +$5/b versus Dubai for November-lifting barrels.
The lower premiums are largely a function of the market structure, as Al Shaheen prices during the month of loading, so it includes two months of backwardation – hence during the loading month of December, February is the trading month for Dubai.
The key M1/M3 (Oct22/Dec22) spread, which regional producers closely monitor, has averaged just over $5/b in October, but was valued at around +$4/b Tuesday when the tender was awarded and has since tumbled to a near six-month low of around $3.25/b Wednesday, according to Quantum data.
Bellwether
The Al Shaheen tender is closely watched as it acts as a bellwether for the Middle East medium-sour crude market and is also a component of the Dubai 'basket' of crudes, often setting the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.
The tender award puts Al Shaheen at around parity with Oman and Upper Zakum, which have been setting the Dubai assessment this month as the lowest of the five grades, which also includes Dubai and Murban.
It is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said is likely to be reduced in December from the current Platts Dubai/DME Oman +$5.85/b for loading next month.
Meanwhile, the Qatar Land tender for December was heard awarded at around Dubai swaps +$4.50/b, compared to the November OSP of $5.15/b over Dubai/Oman.
